Blind vendor law complicates leasing puzzle

In a Friday column about the topic, Rochelle Riley of the Detroit Free Press argued that the convention center could be renamed for boxing legend Joe Louis, as the neighboring Joe Louis Arena heads to the wrecking ball.

On Aug. 17, the convention authority signed a contract with Birmingham-based The Fulkerson Group and Austin, Texas-based Connect Partnership Group to market the naming rights for Cobo Center in a process that could take between six months and two years, said Patrick Bero, CEO and CFO of the Detroit Regional Convention Facility Authority.

Cobo officials think they could sell the building’s name for $500,000 a year. But they won’t know until they test the waters, Bero said.

“I’d love to sit here and tell you there are people banging down our door waiting to throw a pot of money at us, but that would be way premature,” Bero told Crain’s.

The five-member convention authority board made the decision to start considering a sale of the naming rights after years of renovations of Cobo and a revamping of the convention center’s operations have helped reduce annual multimillion-dollar deficits to $288,000 last fiscal year.

“We always knew that at some point we were going to have to test the market and see if it would be possible to sell the naming rights and what that would garner us,” Bero said Friday.

But Bero cautioned that renaming Cobo is not a sure thing.

“If the returns are right and the partner is right, then the board will consider it at that time,” he said.

Tavi Fulkerson, president and owner of The Fulkerson Group, said the two firms will start by studying the value of the naming rights to the riverfront convention center “and whether it’s the right thing to do.”

“With the renaissance of Detroit and the incredible and impressive renovation of Cobo Center, there certainly should be some opportunity,” Fulkerson told Crain’s. “There’s not a great deal of major branding positions left.”

In 2009, the Legislature created the convention authority to take over the city-owned convention center and bring it under regional governance after Detroit was losing about $21 million annually. The voting board members are representatives of Detroit, Wayne, Oakland and Macomb counties and the state of Michigan.

Under that agreement, lawmakers pledged a continued state subsidy of Cobo Center that is being gradually reduced until 2023, when the money goes away completely.

The state subsidy comes from taxes on hotels, liquor and cigarettes and initially allocated $11 million to Cobo Center in 2009. This fiscal year Cobo is getting $6 million from the fund.

In the fiscal year that begins Oct. 1, the subsidy will be reduced to $5 million and stay at that amount until 2023, Bero said.

“We’ve been given a mission by the Legislature … to get this facility to break even. So we cannot keep any stone unturned,” Bero said. “… They didn’t want it to be an endless blank check.”

Changes in management of Cobo Center and increased convention business helped the authority narrow its deficit to $3.4 million in 2014, $2.7 million in 2015 and $280,000 last fiscal year.

Through July, Cobo Center’s revenue was running $49,000 behind from a year ago, Bero said.

The Fulkerson Group and Connect Partners Group have formed a joint company, FulkersonConnect LLC, to work on the renaming project together.

The Fulkerson Group markets and sells sponsorships for major events in Detroit, including the Cobo Center’s marquee event, the North American International Auto Show; the Ford Fireworks; the Thankgiving Day parade; and the Chevrolet Detroit Belle Isle Grand Prix.

Connect Partnership Group is “very seasoned” in selling naming rights to sports stadiums and amphitheaters, Fulkerson said.

“They have more experience with facility naming, and we have extensive experience with the event business,” Fulkerson said.

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